The influence of formal institutions on the internationalization of companies in an emerging country

Abstract

Purpose – The goal of this study is to use the institution-based viewas the background for an investigation of how formal institutionsinfluence the internationalization processes of firms from an emergingeconomy.

Design/methodology/approach – Our case study is based on semistructuredinterviews with twenty-one representatives of formalinstitutions and firms in the Brazilian wine industry.

Findings – It was noted that formal institutions have positive influenceson the internationalization of Brazilian wineries by providing learning,relationship networks, intelligence about foreign markets, costsreduction, internationalization of business processes, and by promotingthe home country’s image as a wine producer in foreign markets, and asa recognized supplier to the domestic market. They also have negativeinfluences, as excessive bureaucracy, strikes, erection of legal barriers totrade with other countries, insufficient technical knowledge, high taxes,and favoritism benefiting the largest wine producers in the industry.

Originality/value – The paper closes with suggestions for futureresearch on how phenomena such as the relationship strategiesestablished by the wineries impact upon internationalization and howdecisions of a political nature made by formal institutions influencethe wine industry, providing a new outlook on the internationalizationof these firms.

The RBGN has the financial support from Fundação Escola de Comércio Álvares Penteado - FECAP and development agencies Conselho Nacional de Desenvolvimento Científico e Tecnológico - CNPq and Coordenação de Aperfeiçoamento de Pessoal de Nível Superior – CAPES.

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